Ongoing regulatory changes in the Australian property market might not only reshape the banking and mortgage markets, but also spawn a new industry of firms eager to profit off banks and brokers paying redress to customers in relation to past selling practices.

Speaking at an FBAA event in Sydney, industry veteran Steve Weston compared what is happening right now to past regulatory changes in the United Kingdom.

“The most frustrating thing for the UK market, and I suspect we are going to face it here, is there are things that the industry had been doing for years and that were once viewed as acceptable could be viewed in five of 10 years from now as unacceptable. There will then be a retrospective view, which could be painful for advisers and lenders as occurred in the UK,” Weston said.

“We could see a new industry of ‘ambulance chasers’ as they are referred to in the UK, who receive 25 per cent on whatever they can get back from banks and brokers on behalf of their customers for misselling or poor advice,” he added. “There is a real risk we will see this in Australia so it is very important brokers and lenders are taking steps to safeguard themselves against this.”

With the similarities between the Australian and British mortgage market, such a thing is possible to happen in Australia. Brokers have to make sure that every product they offer to their customers is appropriate even in the long run.

“As a credit adviser or lender, you are the expert. You need to make sure that a product is not only appropriate today but over the long term. That is a big change from what has traditionally been the case,” Weston said.